Mr X and Department of Finance

Whether the Department was justified in refusing access to various records concerning litigation between the applicant and a bank

12 March 2020

Background

The State has invested in various banks including the one referred to in the applicant’s request. The European Commission requires Relationship Framework Agreements (the Agreements) to be entered into by the Minister for Finance and the banks in relation to such State investments. The Agreements provide the basis on which the relationship between the Minister and the banks shall be governed, and seek to protect competition in the Irish banking market.

The applicant made a multi-part FOI request to the Department on 19 August 2019 which, between then and 28 August 2019, was amended to seek access to the following:

1(a) Any communications between a named bank and the Department relating to litigation between the bank and the applicant in a specified timeframe

1(b) Any records held by the Department detailing the bank’s Board of Directors’ consideration of that litigation for the same timeframe

1(c) Any consent requests submitted to the Minister by the bank relating to that litigation in the same timeframe

1(d) Any records held in the Department for the same timeframe relating to that litigation

2 Any Department records discussing a particular term of certain guarantees in reference to certain types of litigation in another timeframe

3 Any communications between the bank and the Department relating to specified cases in a specified timeframe

4 Any communications between the bank and the Department relating to a particular related matter.

The Department’s decision of 20 September 2019 refused access to those parts of 14 records which referred to the applicant under sections 35 (confidential information) and 36 (commercially sensitive information) of the FOI Act. The applicant sought an internal review on 7 October 2019, in which he also questioned why the Department had not found further records. The Department’s internal review decision of 25 October 2019 affirmed its original decision on the request and said that it was relying on sections 35(1)(a) (information given in confidence), 36(1)(b) (commercially sensitive information) and 40(1)(b) (financial and economic interests of the State) of the FOI Act.

On 29 October 2019, the applicant applied to this Office for a review of the Department’s decision.

I have now completed my review in accordance with section 22(2) of the FOI Act and I have decided to conclude it by way of a formal, binding decision. In carrying out my review, I have had regard to the above exchanges and correspondence between this Office, the Department and the applicant. I have also had regard to the contents of the records the subject of the Department’s decisions and to the provisions of the FOI Act.

Scope of the Review

In his contacts with this Office, the applicant says that he wants two particular questions to be answered. However, the FOI Act does not generally provide a mechanism for answering questions except to the extent that a question can reasonably be inferred to be a request for access to a record containing the answer to the question asked or the information sought. This review cannot be broadened to consider any records that were not sought in the original request.

The scope of this review is confined to whether the Department’s decision on the applicant’s request was justified under the provisions of the FOI Act.

It is not relevant to that review whether the applicant may have any entitlement to the withheld details under Data Protection legislation. In addition, the Information Commissioner has no remit to assess the merits of any steps taken by the bank against the applicant or others. Neither would it be appropriate for me to direct the Department to grant the applicant’s request on the basis of his assertions about either the bank or the Department.

Findings

Section 15(1)(a) – reasonable searches or records do not exist

The applicant says that further records covered by his request should be held by the Department. He says that the bank should have communicated with the Department about his case given various requirements of the relevant Agreement. The Department says that it can find only 14 records parts of which are covered by part 1(b) of the request.

This Office’s Investigator gave the applicant details of the searches that the Department says it carried out on foot of his request, as well as what it says its role is in relation to the bank. The applicant commented on issues raised in the review in a telephone conversation with the Investigator on 14 January 2020. The Investigator also gave him details on 5 February 2020 of the Department’s position on his arguments. This Office has not received any further comments from the applicant.

Section 15(1)(a) of the FOI Act provides that a request for access to a record may be refused where the record does not exist or where it cannot be found after all reasonable steps to ascertain its whereabouts have been taken. A review of an FOI body's refusal of records under this provision assesses whether or not it is justified in claiming that it has taken all reasonable steps to locate all records of relevance to a request or that the requested records do not exist. It is not normally the function of this Office to search for records.

In considering section 15(1)(a) in this case, it should be noted that this Office has no remit to examine, or make findings on, whether or not the Department should have created further records or required further records to be provided to it by the bank. The review cannot examine the Department’s record management practices generally.

The Department’s description of its role in relation to the bank

According to the Department, its Shareholding and Financial Advisory Division (SFAD) manages the State’s investments in the banking sector on behalf of the State. The SFAD monitors the overall strategic direction of these banks. It develops and executes plans as to how the Minister may optimise the value of the State’s investments with a view to recovering those investments over time.

The relevant Agreement specifically requires the bank to remain a separate economic unit with independent powers of decision making. The bank’s board and management team retain collective responsibility and authority for determining the bank’s strategy and commercial policies and for making decisions on matters such as business plans and budgets. They are also responsible for conducting day to day operations including lending decisions and litigation (including in relation to individual cases of the sort referred to in the request). The Department and the Minister have no role in these matters and in particular, the Agreement expressly prohibits the Department from interfering in the conduct of the bank’s day to day operations. The Minister and Department must ensure that investment in the bank is managed on a commercial basis. The Agreement requires the bank to consult with the Minister and/or seek Ministerial consent only in specific, prescribed and fundamental situations, none of which are relevant to the applicant’s case.

Any bank would be expected to be involved in numerous legal actions at any one time. The Agreement does not require the bank to request the Minister’s consent in undertaking litigation. The Department does not generally require or request records relating to litigation (including that concerning any bank in which the State has an investment/shareholding) unless those actions are material to the State’s shareholding in a bank or the overall position/strategic direction of that bank or the banking sector. The litigation between the applicant and the bank is not material to the overall strategic direction of the bank or the sector. The Department is not a party to the litigation concerned and has no role in it. It does not usually hold records relating to litigation where the Minister is not a related party. It would not be expected that Department officials would become involved in, or request briefing on, or prepare briefings for other Department officials or the Minister in relation to cases of litigation involving any bank.

In carrying out its functions, the SFAD takes account of material information in monthly briefing materials (board packs) that are provided to it by the relevant bank. These board packs are not prepared specifically for the SFAD but rather are prepared by the bank’s senior management for their Board of Directors. Their contents and format reflect the preferences and requirements of the bank’s Board and executive management team at any one time. All documents circulated at the bank’s board meetings are provided to the Minister via the officials in the SFAD. Any records held by the Department concerning the discussions envisaged by other elements of the Agreement are also held in the SFAD and/or the Minister’s Office. While further parts of the Agreement concern updates by the bank of its lending plans and the Minister’s views on those plans, the Agreement specifically requires the Minister not to have any function in individual lending decisions.

The Department’s description of searches carried out

The Department says that the SFAD holds information electronically or in paper form in a locked office, separated from the rest of the Department to ensure that it is only accessed by the relevant officers in SFAD, and only then to undertake the SFAD’s specific roles. All officials were formally asked to search their records and provide all relevant documents to the deciding officer. The Data and Information manager in the Minister’s office also carried out a search of the Department’s correspondence tracking system, the electronic Ministerial submission system, a “legacy system” (Lotus Notes) and all relevant mailboxes in the Minister’s office. Recent board packs have been provided to the Department electronically and can be searched accordingly. Older board packs had to be scanned manually within the Department but these can be searched by Optical Character Recognition routines being run on them.

The Department’s searches found 14 board packs parts of which refer to the applicant. It says that it has carried out reasonable searches for records covered by the request.

I have no reason to reject the Department’s description of the types of records it says it receives from the bank and the lack of input it has in their preparation. Neither have I any reason to reject what it says is its role regarding either the bank, its debtors and its litigation generally or in relation to the applicant’s case specifically. I have also considered the Department’s description of the searches it says it carried out on foot of the applicant’s request. In the overall circumstances, I am satisfied that the Department is justified in withholding further records on the basis that they cannot be found after all reasonable steps to ascertain their whereabouts have been taken. I find that section 15(1)(a) applies. Although not necessary for me to go further, it may also be that at least some of the records covered by the request do not exist (i.e. are not held by the Department) in the first place.

Section 35(1)(b) – duty of confidence

The applicant says that the purpose of the FOI Act is to allow citizens to access official documentation in relation to their personal affairs and that he should be given access to those parts of the 14 board packs that refer to him. He also appears to be saying that he should be given access to the remainder of the board packs so that he can establish whether the bank treated him differently to other debtors. He says that the bank discriminated against him relative to other customers and that its actions (and those of the Department as shareholder/investor) require full transparency.

The Act gives requesters a means of seeking access to records held by FOI bodies, including records containing their own personal information. However, records containing a requester’s personal information may still be exempt from release. Some exemption provisions may be applied at the discretion of the FOI body. Others, such as sections 35(1) and 36(1), are required to be applied to a record where particular criteria are met.

The Department’s position is that the board packs, in their entirety, are confidential and commercially sensitive to the bank. In the overall circumstances of this case and having considered the thrust of the Department’s case as set out in its submissions, it seems to me that section 35(1)(b) is the most appropriate exemption to consider. As has been explained to the applicant, section 35(1)(b) must be applied to a record where granting access would constitute a breach of a duty of confidence provided for by an enactment other than by certain provisions of particular enactments specified by the Act, an agreement or otherwise by law (i.e. an equitable duty of confidence). I note that this Office did not receive any comments from the applicant in relation to the potential relevance of this provision.

Further to section 35(2) of the FOI Act, section 35(1) does not apply to records created by an FOI body in the course of the performance of its functions "unless disclosure of the information concerned would constitute a breach of a duty of confidence that is provided for by an agreement or statute or otherwise by law and is owed to a person other than a FOI body, or a head or a director, or member of staff of, an FOI body or of … a service provider". The bank is not an FOI body or service provider within the meaning of the FOI Act. Accordingly, it is possible for section 35(1)(b) to apply to the records.

Equitable duty of confidence

When considering the existence of an equitable duty of confidence, this Office has regard to the three elements of what are generally known as the "Coco" tests (Coco v. A. N. Clark (Engineers) Ltd. [1969] R.P.C. 41):

"First, the information itself … must ‘have the necessary quality of confidence about it’. Secondly, that information must have been imparted in circumstances importing an obligation of confidence. Thirdly, there must be an unauthorised use of that information to the detriment of the party communicating it."

The Department says that the packs contain extremely sensitive commercial information that has not previously been placed by the bank in the public domain, including legal strategies concerning litigation. Having examined the records, I accept that the information in the board packs is not in the public domain and has the necessary quality of confidence about it. It should also be borne in mind that the release of a record under the FOI Act is equivalent to its release to the world at large. I find that the first test for an equitable duty of confidence to exist is met.

The Department reiterates that the records are prepared by the bank for the bank. It says that they contain market sensitive information that the bank does not disclose generally. It says that the bank provides it with the records for the specific, restricted purpose of enabling the State to monitor its investment in the bank, and on the understanding that their contents would not be disclosed further. It further refers to its description of how it stores the records concerned. It refers to the requirements of the Agreement that any confidential, commercially sensitive or personal information provided to the Minister under the Agreement shall be marked as such and will be treated accordingly by the Minister in accordance with the applicable law. It says that release of the board packs under FOI could cause the bank significant commercial and reputational damage.

The applicant says that if stock exchange rules regarding the dissemination of commercially sensitive information are as strict as the Department says they are, then the bank should not have given information about him to the Department. However, it is clear to me from the Department’s submission why the bank provides copies of its board packs to the Department i.e. for the particular and limited purpose of enabling the SFAD to carry out its functions. I also accept that the records are shared with the Department by the bank on the expectation that they will not be shared further. I accept that the board packs were imparted to the Department in circumstances importing an obligation of confidence. I find that the second test is met in this case.

The final test required to be considered is whether release under FOI of the relevant details would amount to an unauthorised use of that information to the detriment of the party communicating it. I understand that release of information without consent is enough for detriment to arise. It is clear to me that the bank has not consented to the release of its board packs under the FOI Act. I find that the third and final test for an equitable duty of confidence to exist to have been met.

Public Interest Defence

The applicant says that the public interest requires the release of the records to him. It is well established that an action for a breach of confidence is subject to a public interest defence. However, this Office notes that the public interest grounds which may justify or excuse a breach of a duty of confidence are quite narrow. Such grounds include the exposure or avoidance of wrongdoing or danger to the public, and ensuring the maintenance of the principles of justice, which I do not consider to apply here so as to allow me to set aside the duty of confidence. In my view, there is no basis for setting aside the requirements of section 35(1)(b) in this case. I find that the records are exempt under section 35(1)(b) of the FOI Act.

In the circumstances there is no need for me to consider the other provisions of the FOI Act that the Department has relied on in this case. I will say however, that even if the board packs were not of themselves exempt in full under those provisions, any details in them that relate to the banking arrangements of identifiable individuals other than the applicant would seem likely to contain personal information about those individuals. I would be required to consider whether such details qualify for exemption under the mandatory section 37(1). I would also say that the applicant’s private interests in obtaining any such third party personal information do not equate to public interests for the purpose of the FOI act. While there is a public interest in disclosing information relating to the Department’s performance of its functions, both the language of section 37 and the Long Title to the FOI Act recognise a very strong public interest in protecting the right to privacy (which has a Constitutional dimension, as one of the un-enumerated personal rights under the Constitution).

Decision

Having carried out a review under section 22(2) of the FOI Act, I hereby affirm the Department’s decision on the applicant’s request. I find section 35(1)(b) applies to the board packs. I also find that section 15(1)(a) applies on the basis that further records cannot be found after all reasonable steps to ascertain their whereabouts have been taken.

Right of Appeal

Section 24 of the FOI Act sets out detailed provisions for an appeal to the High Court by a party to a review, or any other person affected by the decision. In summary, such an appeal, normally on a point of law, must be initiated not later than four weeks after notice of the decision was given to the person bringing the appeal.